The government should not withdraw tax refund DEPB scheme, which is ending in June, as it will make exports uncompetitive and would affect the growth momentum, industry body PHD Chamber said today.
Exporters get refund of duties on import content of their export products. It costs the exchequer about Rs 8,000 crore per annum.
"If the Duty Entitlement Pass book (DEPB) scheme is withdrawn, it will be difficult for traders to sustain the export growth momentum," the chamber said in a statement.
India's exports registered the highest-ever growth of 37.5% at $245.9 billion during 2010-11, demonstrating a robust demand for Indian merchandises in western markets as well as in Latin America.
The chamber said that the government should not withdraw the scheme unless some alternate export incentive is introduced.
The 14-year-old scheme is the most popular among exporters, especially in the engineering and automobiles sectors. The tax refund mechanism was considered to be non-compliant with the World Trade Organisation rules.